Pentium Raises Big Hopes For Holidays

May 12, 1997|By James Coates, Tribune Computer Writer

Leaders in America's hyper-competitive, obsolescence-driven personal computer industry are hoping to celebrate Christmas early this year. At the center of the celebration under the virtual Christmas tree is a drab little box called Pentium II.

A 3-inch-by-5-inch device about the size of a very fat chocolate bar, Pentium II is poised to become the "Tickle Me Elmo" of cyberspace seven months from now as computer stores attempt to log a better season than last year's semi-dud.

In an industry of superlatives, Pentium II enters the marketplace as the most-superlative yet, with chip speeds blazing well above today's 200 Mhz high-end Pentium MMX standard and with built-in features that let it perform stunning video displays and other seeming wonders.

Underscoring the importance of the new chip in the fast-paced marketplace was the furor that flared briefly last week in the wake of discovery of a computational error in the first of the Pentium II chips.

Concern that the bug might force a delay in release of the Pentium II appeared to have been resolved Friday when a number of major companies issued reports downplaying the likelihood of any problems.

Meanwhile, Intel executives emphasized that the Pentium II will mark a major watershed for its famous Pentium chip line. For example, the new 3-by-5-inch case means that the chip will not fit into the uprgrade slots for today's line of Pentiums. Until now it had been possible to upgrade to a faster Pentium simply by removing one chip and inserting a new one in what is called a Zero Insertion Force socket.

The new design, called Slot 1 in the Pentium II, offers such "under-the-hood" features as graphics accelerators and a doubling of how fast the chip puts out data to the rest of the computer, which makes Pentium II a wholly new product that consumers will encounter in an already confusing marketplace.

The hot new chip will allow creation of "visually connected PCs" that treat full-screen video as though it were just another word processing document or spreadsheet, said Intel's Paul Otellini while introducing the chip at a New York media extravaganza on Wednesday.

If Otellini's predictions are borne out, 1997 and beyond will see huge sales driven by the fact that video PCs are replacing television sets. Otellini also predicts that this year's holiday season should be a fine one indeed for computer sellers.

At South Dakota-based Gateway 2000 Inc., marketing chief David Berger noted that during the 1996 holiday season, computer sellers found themselves without a hot new "must have" product to dangle before consumers.

"This (Pentium II) is the best answer we've ever seen for the needs of computer users of all types," Berger said.

He said that Gateway 2000 expects that machines based on the extremely fast new chips will dominate the company's products aimed at businesses and affluent consumers by year's end.

Gateway 2000 already is running ads selling Pentium IIs at a low end of $2,500 and a high end of $5,000.

Those prices are expected to stay at roughly the same levels for most of the year as Intel cranks up its huge manufacturing complex to turn the chips out in high volumes.

Meanwhile, regular Pentiums should continue as a major force well into 1998 for lower-scale buyers, according to Berger and a variety of other experts.

Virtually the entire pantheon of American computer giants followed the debut of Pentium II with announcements of hot new products based on the hot new chip.

The industry had no such standout product last year and computer sales, while still growing, failed to grow at the accustomed annual rate of nearly 30 percent. The trade journal Computer Reseller News estimated U.S. sales of computer merchandise grew to $28.2 billion in 1996 from $23.4 billion a year earlier.

Sales during the blockbuster 1995 had been fueled by the introduction of Microsoft Windows 95, which hit the American popular culture like a hot new rock band, logging nearly 30 million unit sales in the first year alone.

In 1994 the first of Intel's Pentium chips helped prod another record breaking sales season as Americans rushed to replace their 486 computers with Pentiums that were twice as fast.

The bulk of American computer-makers have come to rely on such booming "Christmas quarter" sales to generate the lion's share of annual revenues.

The stage for this has been set over nearly a decade with the steady advance of new products and new technologies from the core giants of Microsoft Corp., Intel, Apple Computer Inc. and International Business Machines Inc.

Such products as Windows 3.0, Windows 3.11, Windows 95, the Intel 386, the 486, the Pentium, Macintosh System 7.0, and the Power Macintosh all boosted holiday quarter revenue.

"Producing much better products for the world to buy is what we do here," California-based Intel Corp.'s chief spokesman Howard High said in an interview. "We think we've done a pretty good job at that with Pentium II as well as earlier products."